Vale to Double Exports to China Within Five Years

Mining behemoth Vale SA (NYSE: VALE) has announced plans to double its iron ore exports to China within the next five years.

According to Jose Carlos Martins, the company’s head of ferrous metals, the Brazilian company plans to export 400 million tons of iron ore a year by 2019, nearly 50 percent more than the 270 million tons it exported in 2013. Vale currently supplies 12 percent to 14 percent of China’s consumption of iron ore.

“We are hedged for a big volume, our needs are practically covered. If eventually we need something else, we go to the spot market,” Martins said. “Now, as we boost production volumes and we boost exporting volumes, we will need to hire more ships, that’s unavoidable.”

Vale, which operates the biggest iron-ore carriers in the world, is considering purchasing or hiring about 230 new crafts to ship larger volumes of iron to China. The country doesn’t allow Vale’s vessels to anchor at its ports over fears of the impact on supply and prices, has been utilizing transit centers in Africa and a distribution facility in the Philippines to deliver iron ore to its customers in China.

Vale is the world’s largest producer and export of iron ore, the main ingredient in steel.

Iron ore prices in China have averaged $108.82 a ton so far this year, which is the lowest it’s been since 2009. Brazil’s total iron ore exports in July rose 5 percent to 31.1 million mt, from 29.6 million mt in the year-ago period, according to the latest Brazil Ministry of Foreign Trade data.